Secretary-General

Opening of the 11th Global Forum on Competition

Remarks by Angel Gurría, OECD Secretary-General

OECD, Paris, 16th February 2012

(As prepared for delivery)

Ladies and Gentlemen,
It is a great pleasure to welcome you all to the OECD for the 2012 Global Forum on Competition. I would like to extend a special welcome to Pascal Lamy and Otaviano Canuto: both of our distinguished guests are regular visitors to the OECD.

Pascal, I believe this is the first ever appearance of the WTO Director-General at an OECD competition meeting. We are delighted you could join us, especially given the crucial links that exist between trade and competition.

Today and tomorrow’s discussions couldn’t be more timely. We are facing exceptionally challenging circumstances: the global economic recovery remains fragile and the outlook has never been so uncertain. Pascal, Otaviano, you both joined us for OECD Week back in May of 2010, when the theme of the event was “the road to recovery”. Looking back, our discussions – which at the time we had thought were incredibly downbeat – now seem, if anything, rather optimistic. We need to turn the situation around as a matter of urgency.

Competition is key to the recovery

It is encouraging to see that governments, including those severely affected by the crisis, are implementing pro-competition reforms as key to making their way out of the crisis and promoting long term strong, sustainable and inclusive growth. There is a recognition that competition is good for consumers, good for the economy and also has enormous potential for fostering clean government.

Indeed, this growth perspective really is crucial. Our analysis shows that even as economies recover the crisis could well have reduced potential output by about 3% in the OECD area as a whole compared with the levels that would have prevailed otherwise. This output loss will need to be restored to make sure that our economies will be able to grow strongly in the years to come.

That’s why pro-competition reforms are so important. By removing barriers to entry in protected sectors and guaranteeing a level playing field for entrepreneurs, reforming governments can unlock opportunities for investment and for the creation of jobs.

Organisations and experts in competition need to come together to offer solutions to these challenges. This Global Forum on Competition provides the opportunity to do just that.

Volatility in commodities markets – worsening poverty and harming development

I am pleased to see that you have selected price volatility in commodity markets as a key theme for your discussions. It is hard to think of a more important issue. High food prices directly impact on people’s livelihoods. So do high prices for minerals, which feed into higher prices for many goods and services.
Poverty is not just caused by low incomes, but equally by high prices. What matters is not how much you earn, but how much you can buy. I am horrified by the rule of thumb: that every 10% rise in food prices drives another 10 million people below the poverty line.

Faced with these pressures, governments must act. And they need good advice if their policies are going to change lives for the better. It is all too easy to reach for solutions that generate good headlines in the newspapers, but in reality make the problem worse and impede development.

Take price controls, including subsidies, for example -- if the problem is high prices, policymakers may be tempted to control these prices. But we know that this can stifle the very incentives for increased production that could bring prices back down again. Instead of getting cheap food, consumers might indeed get no food at all!

I understand that this topic has attracted a record number of submissions from delegates to this Forum. You will be able to share each other’s perspectives as well as draw on the expertise that the OECD has assembled here today. Your work on the role of competition policy in addressing the problems associated with commodity price volatility will also support the G20’s important work in this area.

Joined-up international action against international cartels

Also significant in this Forum is co-operation among international agencies against cross-border cartels, which you will address tomorrow.

Cartels are the worst form of antitrust violation: they are a fraud upon the public, with no redeeming features. Almost all of the jurisdictions represented here have outlawed them. But cartels persist, and there sometimes seems little to stop them operating internationally.

Chairman Jenny, you have often spoken about international cartels operating with impunity - for example the Heavy Electrical Equipment cartel, which is estimated to have cost importing countries 300 to 500 million dollars per year. Companies made deals that would be illegal at the national level but were able to get away with it because their cross-border business is not matched by the cross-border reach of national competition agencies.

That’s why solving the international problem of cartels requires effective international co-operation. The OECD’s Competition Committee has just launched a three-year programme to bring competition authorities together to find solutions to international competition problems. The OECD is uniquely placed to do this, and I am proud that we are leading this important initiative.

Promoting competitive neutrality

Another burning issue on your agenda is tomorrow afternoon’s discussion of state-owned enterprises – and issue that is also often known as ‘State Capitalism’ – and the OECD’s project to promote competitive neutrality.

Some pundits are saying that State Capitalism – the front page of The Economist a few weeks ago – did better in the last few years, so why not look there for fresh ideas for growth? The important issue in this matter is not state ownership per se, but the governance of state-owned enterprises to ensure that the playing field is level for investors and that the presence of the State in the economy doesn’t thwart competition.

I am pleased that this project will be discussed as part of the Global Forum on Competition. There are more of you here than ever before, with 90 countries among which 56 non members countries represented here today, accompanied by 18 international organisations involved in competition, regional banks and donors, as well as representatives of civil society. I am also delighted that the OECD will provide the venue for the second meeting of the new Africa Competition Forum.

Ladies and gentlemen,
You have an action-rich agenda over the next two days, covering critical issues for the global economy. Governments across the world have turned to you, the competition authorities, for help. You need to be well prepared with analysis, evidence and the accumulated experience of your counterparts elsewhere to engage with governments and to help them find solutions.

I hope you will benefit fully from the OECD’s expertise and the many international experts who will be taking part in the Forum. It is an important job you do; promoting competition in your home countries; making markets work better; creating the conditions for strong, sustainable and inclusive growth in the years to come.

I wish you every success and look forward to hearing the outcomes of your discussions.